Selling on Amazon FBA is a popular option among retailers and business owners when starting an online business. Amazon’s marketplace offers a platform for your products to gain significant visibility.
To expand your reach and leverage Amazon’s established brand and infrastructure, it is essential to acquire ideas on how to start selling on Amazon FBA. The Amazon FBA program enables you to showcase your products or brand globally on the largest eCommerce platform.
To help you sell on FBA the most efficiently possible, below is a compilation of important insights, tips, and guides designed to optimize your success in the Amazon marketplace.
What is Amazon FBA?
In 2006, Amazon launched Fulfillment by Amazon or Amazon FBA with the aim of delivering top-notch customer service to its shoppers. Through Fulfillment by Amazon (FBA), the eCommerce giant opened its network to third-party sellers, offering fast, affordable, and dependable delivery services to customers.
From an online seller’s perspective, FBA reduces their operational expenses and frees up time for them to concentrate on other crucial aspects of their eCommerce business, as Amazon takes care of fulfillment, delivery, customer service, and Amazon returns.
Essentially, the FBA program enables sellers to delegate customer orders to Amazon, streamlining fulfillment processes to be more efficient, swift, and cost-effective.
Should You Sell on Amazon FBA?
Newbie online sellers lacking familiarity with Amazon FBA or eCommerce business, in general, might perceive venturing into FBA as overwhelming. Queries like “Is Amazon FBA easy to start“ or “Is selling on Amazon FBA still worth it in 2024” frequently unsettle them, casting doubts on their goal of establishing a thriving online enterprise.
For those aspiring to start an online business or simply to broaden their brand’s online presence, selling on Amazon serves as a favorable starting point. Embracing FBA can significantly enhance your business’ success, especially when considering these Amazon statistics below:
- The Amazon marketplace is the top go-to product search engine for consumers. It is estimated that around 50% of consumers start their online product search on Amazon. (Source: Search Engine Land).
- Around 57% of US consumers make purchases on Amazon on a weekly basis or more. (Source: Jungle Scout)
- As of February 2024, Amazon continues to maintain its position as the world’s most frequented online retail platform. With over 4 billion visitors to Amazon.com alone, the website holds the eleventh rank globally in terms of website traffic. (Source: Semrush)
- Amazon FBA shipping cost is 70% less per unit on average than premium options offered by major US carriers. (Source: Amazon Stats)
- More than 60% of sales in the Amazon store come from independent sellers—most of which are small and medium-sized businesses. (Source: Amazon)
- Amazon boasts approximately 310 million customers worldwide, with nearly 90% of third-party sellers. (Source: Jungle Scout)
- Amazon has expanded to more than 20 countries, raising its Amazon Prime members to more than 200 million. (Source: Statista)
- FBA provides quicker order processing due to Amazon’s extensive network of fulfillment centers and its large workforce spread worldwide. At present, Amazon operates 110 active fulfillment centers in the United States and 185 centers globally. (Source: Tinuiti)
How Much Money Do Amazon Sellers Make?
“How much money do Amazon sellers make?“ remains a compelling query, as Amazon’s extensive customer base and established brand attract numerous online sellers and entrepreneurs. Selling on Amazon enhances brand recognition and product exposure and serves as a pathway to financial fulfillment. Here is an overview of some Amazon sellers’ monthly revenue to provide insights into their earnings.
The data showcased above provides some insights into the query “can you make money selling on Amazon FBA.” Additionally, it is worth noting that profitability is not exclusive to online retailers when it comes to selling on Amazon FBA. On average, small to medium businesses (SMB) also achieve sales exceeding $11,600 monthly.
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What Do You Need to Sell on FBA?
Opting to sell on FBA demands readiness and dedication from the seller. Although various prerequisites exist for selling on FBA, they can generally be condensed into three main categories. Here are some essentials you will need to start selling on Amazon FBA.
Financial Investment
Like any other form of enterprise, selling on Amazon FBA requires financial readiness. Money plays a crucial role when you sell on FBA for several reasons, including the following:
- Inventory Purchase: You must have sufficient capital to purchase inventory to sell on FBA. Depending on your inventory, an initial investment is required to acquire products to list on Amazon.com.
- Amazon Fees: When selling on Amazon, be prepared for the various fees associated with using Amazon’s platform. These fees include listing fees, fulfillment charges, and monthly subscription costs.
- Marketing and Promotion: Investing in advertising solutions will drastically improve the visibility of your listings. Budget for Amazon’s advertising solutions as well as other marketing strategies.
- Expansion and Growth: An ample fund to facilitate growth and business expansion is also important when you sell on Amazon FBA. As your Amazon business grows, you should consider investing in product offer expansion, enhancing operational efficiency, or even venturing into new markets.
How Much Does It Cost to Start Amazon FBA?
As you prepare financially to start selling on Amazon FBA, a common question is: “How Much Money Do You Need to Start Selling on Amazon FBA?”
The initial investment needed to start an Amazon FBA business varies based on several factors, including product selection, inventory volume, marketing expenditures, and additional overhead expenses. While no fixed figure exists for launching an FBA business, new sellers typically allocate between $2,500 to $5,000 to start their operations.
For perspective, here is a video presentation offering insights into the costs of starting an Amazon FBA business in 2024.
Time
Time is a crucial element when selling on Amazon. It is essential to dedicate time to understanding the intricacies of the business and discovering methods to improve its day-to-day operations. Key areas where time must be dedicated include product research, inventory management, listings optimization, and customer service.
Additionally, as your business grows, time is crucial in scaling up your operations. Effective time management is essential for implementing strategic plans that promote sustainable growth and success in the competitive eCommerce environment.
Knowledge
Since the eCommerce industry is continually evolving, sellers must also keep updating their knowledge and skills. When you sell on FBA, there are specific areas you should focus on learning.
Updating yourself with the latest market trends, effective eCommerce strategies, and up-to-date Amazon seller tools can enhance your FBA business performance. This ongoing learning process equips you with the insights and expertise needed to adapt to the ever-changing landscape of eCommerce.
How to Start Selling on Amazon FBA
Starting your own FBA business need not be complicated. Here are some steps to help you begin your Amazon seller journey:
How to Create an Amazon Seller Account in 2024
As previously mentioned, creating an Amazon seller account is the initial step toward your goal of becoming an Amazon FBA seller. Here is an outline of the steps required to create your Amazon Seller Central account:
STEP 1: Decide first which Amazon selling plan you prefer. You have the option to choose between an Individual or Professional selling plan. To know the difference, simply go to the “Compare selling plan” page.
Image from Amazon: “Compare Selling Plans“; Retrieved: April 08, 2024
Once you choose a selling plan, click the signup button below. For this example, we will be choosing the professional seller plan.
STEP 3: You will be redirected to another page, where you must click the “Create your Amazon Account” button to proceed with creating an Amazon Seller Central account.
Image from Amazon: “Create your Amazon Account“; Retrieved: April 08, 2024
STEP 4: After clicking, you will be redirected to another page, where Amazon will ask for your name, email address, and desired password. Once completed, click “Next.”
Image from Amazon: “Create your Amazon Account“; Retrieved: April 08, 2024
STEP 5: Amazon will then send an OTP to your dedicated email address. You will need to enter it and proceed with the account creation process by clicking the “Create your Amazon account” button.
Image from Amazon: “Create your Amazon Account“; Retrieved: April 08, 2024
STEP 6: After submitting, you will be redirected to another page with an overview of the succeeding processes. Underneath the text is a dropdown menu to select the country where your business is registered or your country of residence if you do not have a business.
Image from Amazon: “Create your Amazon Account“; Retrieved: April 08, 2024
After reading the content and choosing your country of residence or business registration, simply click the “Begin” button.
STEP 7: You will be redirected to another page where Amazon will be asking for your business information. Once provided, click the “Agree and continue” button.
Image from Amazon: “Create your Amazon Account“; Retrieved: April 08, 2024
STEP 8: You will start the final steps to complete your registration. Amazon will be asking you for information concerning the following:
Image from Amazon: “Create your Amazon Account“; Retrieved: April 08, 2024
- Seller Information
- Billing
- Store
- Verification
For a detailed guide on how to create an Amazon Seller Account in 2024, you may refer to the video below:
How to Become an Amazon FBA Seller
Once you have created a seller account, you can now enroll your Amazon selling account in FBA. To register, you can do the following:
STEP 1: Log in to your Seller Central account and hover on the gear icon found in the upper right corner of the page. In the dropdown menu, click “Account Info.”
Image from Amazon Seller Central: “Amazon Seller Dashboard“; Retrieved: April 08, 2024
STEP 2: Once you are on the Seller Account Information page, look for and click the “Manage” button.
STEP 3: Once clicked, you should then select the option to “Register for FBA.”
How to Source Products for Your FBA Business
Before contacting suppliers for your FBA business, it’s crucial to identify the product category or niche you want to focus on when selling on FBA. You should consider market demand, competition profit margin, and your interests.
You can search for reputable suppliers once you have identified the niche or product you want to sell. To continue your FBA product sourcing, you can search for potential suppliers in the following avenues:
- Online Directories
- Trade Shows
- Industry Associations
- Network or Peers
When sorting potential suppliers, you should consider factors such:
- Supplier Reputation
- Product Quality
- Pricing
- Shipping Options
Once you have narrowed down potential suppliers, you should contact them and inquire about their products and services. Remember to ask for information concerning the following:
- Product Samples
- Pricing Quotes
- Minimum Order Quantities (MOQs)
- Lead Time
- Payment Terms
After receiving product samples, be sure to scrutinize them. Evaluate their quality, functionality, and suitability. Once you are satisfied with the product, do not forget to negotiate pricing, MOQs, payment terms, and other terms and conditions that align with your business goals and budget.
Using FBA the Right Way
Fulfillment by Amazon will only work if you use it properly. It would serve you best to know how to utilize this kind of service at the onset of your business.
Think Big, Start Small
In the Amazon business, endurance is one of the keys to success. To endure costly expenses, penalties, and abrupt market changes, you should avoid selling everything you see from suppliers’ catalogs.
Start small and try to limit your portfolio to in-demand items. Remember that the more items you sell online, the higher the storage and warehousing fees.
Perform Product Research
Consider a few items before ramping up your inventory. Thorough product research will help you narrow your options when selling on FBA.
With the help of a product research tool, you can learn about highly competitive niches and profitable items while avoiding stagnant and/or dead inventory.
Product research is never random; there are checklists to consider. Here are some of the essential things you should check when performing Amazon product research:
- There is a sufficient profit margin.
- There is moderate competition.
- There is a good demand for the item.
- The item is licensed and not restricted
- The item must not be bulky and complex.
- The item belongs to a popular market niche.
Trial The Use Of Amazon Ads
Amazon Ads is a convenient way of increasing product and brand visibility in the Amazon marketplace. If you are considering advertising campaigns for your Amazon business, it is best to check the onsite ads on Amazon.
Amazon advertising solutions, such as Sponsored Products and Sponsored Brands, offer a quick and effective way of advertising on the Amazon website. Amazon Sponsored Products promotes individual product listings, while Amazon Sponsored helps showcase brands and product catalogs through creative ads that appear in relevant shopping results.
Leveraging Amazon Influencers to Boost Your FBA Business
If you wish to increase brand or product visibility, contact Amazon Influencers for help. Amazon influencers are individuals or groups that have established themselves as authorities in a particular niche or social media platform, thus allowing them to influence consumers’ purchasing behavior.
One of the things to consider when venturing into an influencer marketing campaign is the conversion rate. Accordingly, a commonly agreed-upon good conversion is 3% and above. Amazon FBA sellers should focus on the following campaign goals when leveraging Amazon influencers:
- Increase brand awareness
- Increase of engagement
- Lead generation
- Website traffic boost
Maximizing Positive Reviews on Amazon FBA
Reviews or feedback from Amazon shoppers play a crucial role in your Amazon business. It is estimated that around 95% of shoppers read online reviews before purchasing an item. Hence, you should strive to obtain more positive reviews for your Amazon FBA listings.
Amazon product reviews can help increase consumer trust and interaction. Amazon reviews from previous shoppers who have bought, tested, and examined the products can increase the likelihood of prospective customers purchasing your product.
Besides influencing consumers’ purchasing behavior, Amazon reviews likewise affect product ranking. The more positive reviews you obtain for your listings, the higher the chance they will appear on top of Amazon search result pages.
Furthermore, good reviews also affect your Amazon Buy Box win rate. Since customer review is one of the factors evaluated by Amazon for awarding the Buy Box, you should always strive to provide the best products and customer service to gain more positive reviews on your listings.
Offering Competitive Pricing on Amazon FBA
Besides checking previous customer reviews, Amazon shoppers also base their purchases on the product price. After deciding what item to purchase online, price is a top consideration for shoppers.
It is a must, therefore, for Amazon FBA sellers to offer competitive prices when selling on Amazon. In most cases, Amazon sellers provide the best price possible by using AI repricers. Automated repricing can help sellers offer a competitive price based on various market conditions, including competitors’ pricing behavior.
Using High-Quality Images to Enhance Amazon FBA Listings
Uploading high-quality product images for your listings can help improve your business’s conversion rate. Product images attract shoppers to your listing page and allow them to evaluate your product.
The high-quality images you upload, accurate product descriptions, and previous customer reviews can increase the likelihood of Amazon shoppers purchasing your FBA products.
Advantages of Amazon Fulfillment Service in 2024
Typically, newbie sellers inquire about the advantages of selling on Amazon FBA. To enlighten those new to the platform or considering selling on FBA, here are some compelling reasons to sell on FBA in 2024.
Trusted Reputation
One of the reasons many sellers subscribe to the FBA program is its reputation. Thanks to Amazon’s solid reputation in the industry, you can quickly gain customers’ trust when your products are associated with Amazon FBA.
Free Delivery Offers
With Amazon FBA, sellers can offer free delivery for customers with Amazon Prime subscriptions. Offering free shipping increases the likelihood of online shoppers choosing your product while decreasing instances of cart abandonment.
Increase Amazon Buy Box Win Rate
Another known advantage of using fulfillment by Amazon is the increased chances of winning the Amazon Buy Box. It is a known fact among sellers that the Amazon algorithm favors FBA sellers when awarding a spot in the Buy Box.
Quick Order Processing
Since Amazon FBA operates on a unique ordering system, it can process and dispatch customer orders faster. Amazon also has an established relationship with shipping companies, so ordered items are shipped faster.
Impeccable Customer Service Management
Amazon is known as a leader when it comes to customer service. When enrolled in the Amazon FBA program, you can take advantage of Amazon’s customer service management. The Amazon customer service team will answer queries concerning items ordered, including questions about refunds and returns.
Reduced Overhead Expenses
Fulfillment by Amazon is the best option if you are trying to minimize your expenses. Since you will simply send inventory items to Amazon fulfillment centers, you will drastically reduce warehouse rental fees, operating expenses, and other overhead costs related to the FBM process.
Multi-Channel Fulfillment Center
With multiple Amazon fulfillment centers scattered around the globe, shipping can be faster. Handling the shipping of products sold on multiple channels is more convenient with FBA.
Low Startup Cost
Even though starting an FBA business with a substantial investment can be advantageous, it is optional. For those with a capital of less than $1000, there is still an opportunity to start your business. You may refer to our guide on How to Start an Amazon FBA Business With Little Money to learn more.
Disadvantages of Using Fulfillment By Amazon
While there are numerous advantages to utilizing Amazon FBA for online selling, it is important to acknowledge that there are also some challenges that online sellers may encounter when selling on Amazon FBA. Below are some of the recognized drawbacks associated with selling on FBA.
Product Guidelines
One of the challenges when dealing with fulfillment by Amazon is the precise product guidelines. Since these guidelines are mandatory, observing them can be demanding on some sellers, especially the new ones.
Amazon Fees
Selling on Amazon FBA costs money. Sellers have to pay fees to use Amazon’s services, such as referral fees, storage fees, and even product return fees. These Amazon FBA fees can be burdensome for sellers.
Change in Control
Sending your inventory items to the Amazon warehouse means giving up complete inventory control. Amazon will ship and pack the items their way.
Danger of Returns
Amazon’s product return policy can harm your business if you frequently experience it. Product return fees can dramatically impact your Amazon business.
Getting to Know Primary FBA Fees in 2024
Amazon sellers and would-be sellers need to know the primary fees involved in the FBA service.
Referral Fees
A referral fee is what Amazon charges for every item sold from your inventory. The fee is taken from the total sale price, and the percentage of the deduction or the referral fee varies depending on the product category.
Fulfillment Fees
This refers to Amazon’s per-unit fees. The fee is flat and based on the size and weight of the inventory item.
Inventory Storage Fees
You will also incur inventory storage fees for the items sent and stored in the fulfillment centers. The storage fees vary depending on the product size tier and the duration of the unit’s stay in the warehouse.
Other FBA Fees
Product Return Fees: Sellers will be charged for FBA returns for items eligible for free returns, especially via Amazon Prime.
Inventory Removal Fees: Sellers incur inventory removal fees when removing items from the Amazon warehouse.
Amazon Seller Tools for Increased FBA Sales
There are many methods and suggestions for increasing your Amazon sales. However, regardless of your approach, you must consider using Amazon seller tools to increase your business’s profitability.
Here are some Amazon seller tools to increase FBA sales in 2024.
Amazon Repricer: An Amazon repricer, particularly the more advanced AI repricers like Seller Snap, can help create an effective pricing strategy. Repricers will help you avoid Amazon price wars while maintaining a competitive listing price.
Product Research Tools: As emphasized in the preceding paragraphs, product research tools will help you find a product that provides better value for your business. This tool will also help you avoid slow-moving products.
Amazon FBA Calculator: Another must-use seller tool is the Amazon FBA calculator. With the help of the FBA calculator, you can have insight into the potential revenue and the possible margin impact of an item’s price change.
Feedback Tools: Reviews or customer feedback matter for Amazon. If you wish to increase store credibility and customer rating, you should approach customer reviews proactively with the help of feedback tools. A feedback tool will automatically send review request emails to Amazon customers.
What is Fulfillment By Merchant (FBM)?
Amazon allows multiple fulfillment services for third-party merchants. If you need to customize the packaging, have a very large operation, or have large products in weight and size, Amazon FBM is the best alternative.
Amazon FBM is a method that gives sellers control over the entire handling and shipping process. This means that sellers will not incur all the fees associated with FBA.
Let Amazon FBA Improve Your Business
Since its inception, numerous online sellers have realized the benefits of Amazon fulfillment to their retail business. Despite having other channels to dispose of their items, Amazon FBA remains the top destination for online sellers.
What attracts sellers to Amazon FBA is the convenience it offers. Instead of focusing on the whole process of picking, packing, and shipping, Amazon is a reliable proxy that handles those things for you.
If you want to remain competitive in the e-commerce industry, Amazon FBA might be the fulfillment service you need by 2024.
